Debate jibes ignore Chinese counterfeiting’s long history

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Some of the most acrimonious moments of Monday’s presidential debate occurred during the candidates’ discussions of China, with Barack Obama attacking Mitt Romney for his investments in Chinese companies, and Romney demanding that we adopt a tougher line on the Chinese counterfeiting of American products. Romney was particularly shocked to discover that counterfeit valves –bearingfake serial numbers – were “being sold into our market and around the world” as though they’d been made by the U.S. competitor. “This can’t go on,” he insisted, as if this were a fraud being perpetrated for the first time during Obama’s presidency. While Romney’s outrage may make for good politics, history shows that Chinese counterfeiting is almost as old as America itself.

The first American ship to travel to China was the Empress of China, which sailed from New York to Canton (modern-day Guangzhou) in 1784, returning to New York in May 1785 with a cargo of tea, cotton fabric and porcelain. It earned its backers $30,000, a 25 percent return on their investment.

As word of the Empress of China’s successful trip spread, a growing number of American merchants headed out to get their piece of the proverbial China pie. Between 1784, when the Empress of China blazed the trail, and the end of the War of 1812, almost 300 American ships made 618 voyages to Canton.

The merchants on those ships were greatly impressed by the highly skilled Chinese craftsmen, who were among the worlds most talented and productive. And the Americans noticed, as had the many European traders who preceded them, that the Chinese were exceptionally good at copying or reproducing objects and images.

Among the most intriguing Chinese reproductions were paintings. For a small fee, Chinese painters in Canton would copy any image the foreigners provided. (They also created unique paintings of Chinese scenes.) Americans took full advantage of this opportunity, and many famous American paintings, engravings and prints were thus duplicated and brought back to the United States. Among the more popular were representations of Lady Liberty, John Paul Jones, the landing of the Pilgrims and the Battle of Lexington.

The most popular subject, however, was George Washington, and the most desirable image of the great man was the one by Gilbert Stuart, called “The Athenaeum Portrait,” of which there were multiple versions. (It is the model for the engraving of Washington that appears on the $1 bill.)

When Chinese copies of this portrait began to arrive in America in the late 1700s, Stuart was infuriated. Those who had purchased one of the originals from him had signed an agreement stating that they would not allow it to be copied, yet here was proof that the agreements were being flouted. One customer in particular, Captain John E. Swords of Philadelphia, was a major offender, purportedly placing orders in Canton for 100 copies of the portrait to be done as reverse paintings on glass. Stuart sued Swords, and a judge ordered the captain to stop. How many copies of Stuart’s Washington portrait ultimately made their way to the United States is unknown, but whatever the number they were joined by many other Chinese reproductions of American paintings that hung on the walls of some of America’s finest homes.

Americans also encouraged the Chinese to counterfeit the goods of other countries. By the early 1830s the Carnes brothers of New York City, Francis and Nathaniel, had grown rich importing goods from France, such as perfume, porcelain, fans and silk. That’s when they came up with a novel idea: Why not have Chinese craftsmen replicate French goods for a fraction of the cost? After all, since the Chinese had shown great facility copying Western paintings and artistic styles, why couldn’t they do the same for other items? And how about making cheaper versions of popular European foods and drugs as well? So the Carneses sent European samples to Canton, and the results were spectacular.

Americans—especially members of the slowly emerging middle class, who had discretionary income and a hankering for the exotic—were ready to buy. Faux French silk scarves and feather fans, along with delicious sauces, sweetmeats, syrups, rose oil and other impressive imitations, flooded into French-crazed New York, where they were sold for authentic prices. This was excellent news for the Carneses, since the knockoffs were ridiculously cheap compared to the real things. The Chinese even managed to find a pulpy wood that when pickled and packaged just right could pass for the much more expensive rhubarb. Although a few children reportedly died from eating too much of this product, it sold quite well. Finally the Carneses greed got the better of them. They imported so many fakes that the market became saturated and prices tumbled, forcing the brothers to shut down their Canton operation.

Although the level of Chinese counterfeiting today is many orders of magnitude greater than it was centuries ago, it’s worth remembering that this problem is nearly as old as our trade with China itself. And as the Carneses discovered, the more the West chooses to rely on cheap Chinese labor, the more entrenched the counterfeiting problems become. Today’s public officials haven’t solved that paradox any more than their predecessors did 200 years ago.

PHOTO: Counterfeit drugs seized by the U.S. Customs & Border Protection are seen on display at the agency’s offices at John F. Kennedy Airport in New York August 15, 2012. REUTERS/Keith Bedford

Last I checked, China wasn’t a US State. It doesn’t have to, nor should it care about a US monopoly on patents and copyright. Any law that makes a product illegal to reproduce only grants certain individuals a monopoly with the backing of the largest group of ‘legal’ mercenaries on the planet.

Any monopoly stifles competition and keeps prices high. So the rich get richer by suing their competitors out of business in a court system that everyone is forced to pay for.

There is no free trade with a monopoly present. It’s a good thing whoever invented the wheel didn’t have a patent office and taxpayer backed court to protect him.

The difference between now and then is that now the yuan is ‘set’ at a level that artifically makes China more competitive than any other country in the world at labour tasks. This is causing massive employment in China (see Foxconn working conditions) while massive unemployment elsewhere. If the yuan was allowed to trade at market prices supply/demand equilibrium would be restored but as it stands there is an artificial barrier to this.

@LysanderTucker:
> “Last I checked, China wasn’t a US State. It doesn’t have to, nor should it care about a US monopoly on patents and copyright.”
— If they want to sell goods to the USA, they do. And if they want to sell anything to any other countries that abide by international norms of intellectual property rights (or, who want to trade with the USA), they do.

Competition is fine as long as the work is being done by those charging for it. Herein lies the problem. To copy a painting is to do but half of the work associated with that work of art. The other half is stolen, unless explicitly permitted by the original artist, or unless the original work is in the public domain.

Free trade with foreign nations will destroy the sovereignty of any nation that does not impose import controls on products that fail to abide by local laws. Free trade can only be achieved in the long term with strong treaties that enforce standards of fairness and true equality, which all signatories are willing to enforce even where there is no local cultural precedent for those standards. This is about the honor of the Chinese and Americans, in upholding the standards they signed up to with the WTO etc., or in abandoning those treaties, rewriting them, and starting again.

Just because the Chinese and Indians are doing almost nothing about the manufacture and export fake valves and aircraft parts, or outright rip-offs of the trademarks that go with those safety-critical parts; doesn’t mean the Americans can’t or shouldn’t do something about that. It is the duty of the American government to protect the safety of American citizens, and to protect the value associated with their labor from being undercut with unsafe or unjust counterfeits.

FOR THE SAKE OF BALANCE: I will add that I have my doubts about SOME of the IP rights asserted by the Americans in recent times… Software patents being one area of concern…

If the Chinese allow their currency to rise in value it’s purchasing power will also increase and make imported materials cheaper for them and more expensive for everyone else. There will be many more very wealthy Chinese businesses and individuals chasing the same goods and raw materials as the developed economies but with a currency with greater value.

But they, the Indians, and the Africans will still have the advantage of enormous pools of cheap labor and a relatively lower cost standard of living.

The dollar here will have to shrink in value even more than it has and that will hurt the US on cost of imported goods and materials.

No matter what the Chinese and American economies do in relation to patent and intellectual property rights, the cost of living could become crushingly expensive here as over 3 billion people join the more affluent economies on their own or any terms that prevail.

We may find we can’t afford to buy even the “cheap” knockoffs. The United States made the supreme blunder of investing in the private automobile and creating an entire land use model dependent on it. If the cost of fuel continues to rise (is there any reason why it won’t) the American economy will have that built in overhead cost that could be crushing. It is already a country where commutes can be hours long each day. That might not be the case with the Chinese who seem to be encouraging compact urban development and are used to living in urban environments and compact villages. The same can be said for South America and Africa. And those countries can invest in abundant solar energy.

The rest of the world may not unduly inconvenience their own economies by adhering to intellectual property rights when the developed economies were those that tended to set the standards to their own advantage.

We made our very spacious super king sized bed and may die a slow economic death trying to maintain it. To make matters worse the country has been protected with land use laws that guarantee that king car will have a very long reign even if the owners can’t afford to do any more than admire him in their driveway.

The Chinese and Indians should do us a big favor and make cheap knockoffs and hyper fuel-efficient automobiles and to hell with the domestic manufacturers. They profited mightily on their version of the “American dream” (and I can still remember some of the behemoths they produced during the 50′s and 60s and still produce for these who can’t move enough tonnage both in terms of the weight of the vehicle and their super sized fat rear ended occupants, on a daily basis) but if it becomes a nightmare, we will want them torn to the ground and will curse the bailouts.

And the most pathetic thing about attempts to improve American productivity and competitiveness seems to involve more automation that employs fewer and fewer consumers to keep the whole rattle trap of an economy alive. The future here promises to be one where a smaller percentage of the population actually has productive employment that can compete globally and the rest are on welfare or stuffing every service sector job imaginable at lower rates of pay and no benefits. How is that going to be sustainable in the long run?

I would like to point out, since you are going back for centuries to show how untrustworthy China is to trade with, they learned the rules from the masters of foreign trade — the British Empire — who failing to crack the Chinese market because of low Chinese demand for British goods and insisted on being paid in hard currency — i.e. the drain in silver from Chinese trade nearly bankrupted the British — so the British deliberately introduced opium into China to force the Chinese to trade with them by getting the Chinese people hooked on opium.

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A short history of trade with China:

(From Wikipedia) “Because of its strong mass appeal and addictive nature, opium was an effective solution to the British trade problem. An instant consumer market for the drug was secured by the addiction of thousands of
Chinese, and the flow of silver was reversed.

When the Chinese government objected to this practice by the English and began to pass laws limiting the use of opium to medicinal use only, the British caused the collapse of the Chinese government by fomenting (from Wikipedia) “The Opium Wars, also known as the Anglo-Chinese Wars, divided into the First Opium War from 1839 to 1842 and the Second Opium War from 1856 to 1860, were the climax of disputes over trade and diplomatic relations between China under the Qing Dynasty and the British Empire”.

The result of the English deliberately “cheating” (backed up by military force) in their trade with China was a tremendous success. Once China had been forced open by Britain, other European countries, including the US joined in to loot the defenseless Chinese people.

Ultimately, the Qing Dynasty collapsed. “It was the last imperial dynasty of China, ruling from 1644 to 1912 with a brief, abortive restoration in 1917. It was preceded by the Ming Dynasty and followed by the Republic of China.”

“The Republic of China was founded in 1912 and its government was located on mainland China until 1949, when it lost the Chinese Civil War and withdrew to Taiwan.[1] As an era of Chinese history, the republic was preceded by the Qing Dynasty and followed by the People’s Republic of China.”

“The People’s Republic of China is a single-party state governed by the Communist Party of China.[16]”

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Today, China is still ruled by the Communist government the Western Nations are totally responsible for creating, mainly by deliberately destabilizing and destroying the Chinese system of government that had endured for thousands of years to force “free trade” on them.

This gave he burgeoning Communist movement of the early 20th — which was primarily a reaction against the excesses of capitalism — a foothold in China.

THAT is the ugly truth as to how and why China went Communist.

So, when China decided to open up trade with the West after the insanities of Chairman Mao, beginning in 1980 they wisely chose to use our own “free trade” policies against us.

Since then (beyond their wildest imagination) the greed of Western nations has allowed them to leverage “free trade” to their absolute advantage for more than 30 years, — completely draining the US economy to the point where we are now forced to print money to survive — and have been finally able to take revenge for “the Unequal Treaties and the Opium Wars (that marked) the start of China’s “Century of humiliation”.

The problem with people/nations who forget history is that they are condemned to repeat it.

Not surprisingly, the European Nations and the US have totally forgotten with they deliberately did to China — nearly destroying China and the Chinese people in their greed for “free trade” — BUT THE CHINESE HAVE NOT FORGOTTEN AT ALL, AND ARE NOW TAKING THEIR REVENGE BY DESTROYING THOSE NATIONS WHO SOUGHT TO DESTROY THEM.

THAT is what is really going on with free trade, piracy, manipulation of currency rates, etc.

Sorry, but I simply can’t resist this one last gibe, one that should seem intuitively obvious from what I said above, but with most things related to China and Chinese trade.

Somewhere in the back of their minds, the Western Nations are still thinking that if the global economic situation deteriorates enough, China will come riding to the rescue.

In fact, you are “Waiting for Godot”, since it is the Chinese who orchestrated this US and eurozone collapse, and are now sitting back with satisfaction as their greedy oppressors begin to collapse.

The problem is that the “global economy” doesn’t exist. It is nothing but a figment of the fevered imagination of the wealthy class worldwide — EXCEPT IN CHINA — where they know there is NO such thing as a “global economy”.

Conspiracy Theory?

Think that if you like, but notice Chinese official policy — if you are paying attention — is to agree with everything, but do nothing.

China is well on its way to becoming the world’s next Great Power, all at our expense.

WHAT IS TRULY IRONIC IS THE FAVORITE MOTTO OF THE WEALTHY CLASS IS “SURVIVAL OF THE FITTEST”.

WHAT THEY DON’T UNDERSTAND IS CHINA IS USING THE SAME MOTTO, BUT ON THEM …

Apparently a bit of “ancient Chinese history” is more of a challenge than Westerners can handle.

How about this for a change?

I’m sure most Americans would know who the Father of the US (hint: George Washington) but how many of you would know the Father of Modern China?

Does the name Deng Xiaoping strike a chord with anyone?

Therein lies the problem. We simply do not know, understand or care who/what was responsible for the sudden change in China’s attitude towards the West, especially the US, at the end of the 1970s and early 1980s.

After all why look a gift horse in the mouth?

And NO it is NOT that China suddenly saw the light of capitalism and benefits of free trade.

Deng Xiaoping; 22 August 1904 – 19 February 1997) was a politician and reformist leader of the Communist Party of China who led China towards a market economy. While Deng never held office as the head of state, head of government or General Secretary of the Communist Party of China (the highest position in Communist China), he nonetheless served as the paramount leader of the People’s Republic of China from 1978 to 1992.

Deng was instrumental in China’s economic reconstruction following the Great Leap Forward in the early 1960s.

Inheriting a country fraught with social and institutional woes resulting from the Cultural Revolution and other mass political movements of the Mao era, Deng became the core of the “second generation” of Chinese leadership.

He is considered “the architect” of a new brand of socialist thinking, having developed Socialism with Chinese characteristics and led Chinese economic reform through a synthesis of theories that became known as the “socialist market economy”.

Deng opened China to foreign investment, the global market and limited private competition.

He is generally credited with developing China into one of the fastest growing economies in the world for over 30 years and raising the standard of living of hundreds of millions of Chinese.

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The truth is we haven’t been dealing with a “Communist Leader” in China for over 30 years!

Apparently, a new class of Chinese leadership that is clearly one hell of a lot brighter than our politicians with their preconceived notions of what China is today.

p.s. I wonder, if asked, how many US politicians would

Hello! Is anyone out there? Or are you playing video games and watching the “boob-tube” to keep your “minds” active?

” Although the level of Chinese counterfeiting today is many orders of magnitude greater than it was centuries ago, it’s worth remembering that this problem is nearly as old as our trade with China itself. And as the Carneses discovered, the more the West chooses to rely on cheap Chinese labor, the more entrenched the counterfeiting problems become. Today’s public officials haven’t solved that paradox any more than their predecessors did 200 years ago.”
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And what if a solution to this problem used indigenization? It will be possible to stop counterfeiting and revive its production, creating new jobs. Meanwhile there are some questions you can try to solve it.

Their problems will really start with stepping foot on the throne of the world. The rest of the world is not Chinese and we are not used to being forced to “Kowtow” or “Hoi” on demand. China has signed the UN Universal Declaration of Human Rights and is moving into conformity with it.

But the media manages to create something nearly like mass movements to agree and a more seductive equivalent than genuflection on demand. I am already at the stage of thinking where I think the two party system is really only one party in disguise.

But I don’t agree there is no such thing as a “world economy”. The west has needed China since the middle ages and global trade based on higher valued gold in the west versus higher valued silver in China was the charge that sparked the Renaissance. Fernand Braudel explains this much better in his 3 volume series “Civilization and Capitalism”.

Really copying is not the issue. The issue is how one Government can impose draconian legal standards on its citizens and their products while allowing the importation of products from another country with no such norms or standards. Who’s Benedict Arnold now, but the Government sworn to protect and defend its citizens.